Archive for April, 2015

EU business activity picked up in March due to the European Central Bank printing money to spike economic growth, while

US manufacturing up, Chinese hitting the breaks.

Chinese factories slowed down fueling expectations of more monetary stimulus. U.S. manufacturing growth also rose despite a stronger U.S. dollar and the threat of an increase in interest rates from the Federal Reserve.

The EU Composite Flash Purchasing Managers’ Index (PMI) from data vendor Markit, jumped to a 54.1, nearly a four year high, from 53.3 in February. The surveys pointed to 0.3 percent EU economic growth in the first-quarter, Markit said, matching the previous three months’ but coming up short of the 0.4 percent median forecast in a poll taken earlier this month by Reuters. The ECB started buying more than a trillion euros worth of bonds in March in a quantitative easing effort.

A sub-index measuring euro zone prices jumped to 49.0, the highest in eight months. It has been below the break-even level of 50 for three years, suggesting inflation will not return any time soon. Oil prices have dropped significantly over the course of the past nine months and inflation rates across the world have followed suit.

Signs that the EU economy was gaining momentum such as, European shares and the euro rose up on the data, but a slowing in China kept oil and commodities-linked assets under pressure. Both the US dollar and corporate stocks have risen in recent months.

CHINA HITS THE BRAKES
China’s flash HSBC/Markit PMI dropped to 49.2 in March, an 11-month low, this is below the 50 level that separates growth from contraction. First-quarter economic growth in China is expected to slip below the government’s target of 7.0 percent, commonly seen as the level needed to keep employment steady.

Leaders in China are willing to allow a slower economic growth as long as employment stays strong. But the latest PMI employment sub-index dropped for a 17th straight month, hitting its lowest since the depths of the global financial crisis.

U.S. MANUFACTURING GROWTH AT FIVE-MONTH HIGH
The U.S. manufacturing sector has continued to grow, and reached a five- month high in March. The preliminary U.S. Manufacturing Purchasing Managers’ Index rose to 55.3, its highest since October, when the final PMI was 55.9.

The flash reading of the index measuring new orders also rose to 56.4 in March compared to 55.8 in February. Employment growth also rose in March from February.